BofA Looks to Play Catch-Up in Asia Corporate Banking

Bank of America Corp
will seek more lending and cash management business with
companies in Asia and elsewhere outside its U.S. home turf,
Chief Executive Brian Moynihan said, an area ripe for expansion
where it lags its big rivals.

Bank of America Corp
will seek more lending and cash management business with
companies in Asia and elsewhere outside its U.S. home turf,
Chief Executive Brian Moynihan said, an area ripe for expansion
where it lags its big rivals.

That could mean vying for market share with more entrenched
global banks such as Citigroup Inc and HSBC Holdings Plc
in fast-growing regions like Asia, where Fortune 500
companies and big local corporations demand a full spectrum of
banking services from hedging to foreign exchange to cash
management.

"Inside the U.S. we're number one in cash management
revenues, but outside it, against some of our competitors, we're
less than we want to be," Moynihan said in an interview with
Reuters on Friday.

"We might get 70 percent of our revenues from a company
inside the U.S., when only 50 percent of their revenues are made
there, so we're missing opportunities," he said.

The U.S.-based lender won't be jostling with competitors,
however, for securities business in China, where most big names
in global banking have been eagerly setting up joint ventures.

"It's not sensible to have a minority stake with no path to
control," said Matthew Koder, Bank of America's Asia Pacific
president. Foreign banks in China are only allowed to offer
investment banking services through an onshore partner.

"Right now, everyone's losing money in China," Koder said.

When Bank of America, the second-largest U.S. lender,
announced its fourth-quarter results in January, the
improvements in mortgage lending and problem home loan figures
showed the bank is finally moving past its disastrous 2008
purchase of subprime lender Countrywide Financial.

But with total revenue down 25 percent, Bank of America
faces the same problems as its peers - thin lending margins and
tough new capital rules - and is looking outside its home market
for growth.

A McKinsey study spells out the opportunity. By 2014, large
corporations in Asia will yield an estimated $118 billion a year
of risk-adjusted revenue from bank borrowing and $108 billion a
year from deposits and cash management, against just $28 billion
in investment banking fees.

Bank of America has lagged its U.S. peers in Asia,
establishing a presence there in 1957 with offices in the
Philippines and Japan and now operating in 12 countries, while
Citi has been in Asia since 1902 and has offices in 18
countries. JPMorgan Chase & Co operates in 16 countries
and entered the region with a Sydney office in 1872.

Moynihan saw scope for the bank to expand its service
offerings in Asia, although not necessarily the number of
countries where it operates.

"We need licences, so we're rounding those out, but we have
enough office coverage to service our clients," he said.

Bank of America has banking licences in all 12 countries
where it has offices in Asia but lacks broker-dealer licences in
Malaysia, Thailand and the Philippines.

The bank has also been poaching senior bankers from
competitors in the region at a time when the industry as a whole
is shedding staff to cut costs.

Last October, it brought China rainmaker Margaret Ren,
daughter-in-law of former Chinese Premier Zhao Ziyang, back to
the firm after a stint at BNP Paribas SA, and hired
Loh Boon Chye, a veteran of Deutsche Bank AG who
built the German firm's Asia markets business, to try to
replicate that success. This February, it hired two senior
bankers from Credit Suisse.

Moynihan rejected the possibility, however, that the bank
might return to offering wealth management services in Asia,
after selling its non-U.S. wealth management unit.

"We were in it, we know the economics," he said, referring
to the low fees the bank earned from serving so-called mass
affluent clients around the world.

Bank of America's shareholders have generally lauded the
work Moynihan has done post-crisis in steering the bank's
recovery, solidifying its balance sheet and restoring its focus
on customers. He took the helm as CEO in 2010 after Ken Lewis
resigned.

The bank's shares have risen 51 percent over the past 12
months, to $12.26, far outpacing a 24 percent rise in the S&P
financials index. Last month they hit a 21-month high.

Moynihan offered no targets for non-U.S. earnings growth at
his bank, which according to a survey released late last month
by Greenwich Associates did not rank among the top five banks
used by large companies in Asia. The leaders were HSBC, used by
67 percent, and Citi, at 57 percent.

Moynihan said the bank would be able to boost revenue from
corporations in Asia and elsewhere, however, by leveraging its
lending capabilities to win ancillary business from clients.

"Anywhere there are no deep capital markets, you need
balance sheet. Our international loans exposure is now bigger
than our U.S. exposure," he said. "We are in the business of
making loans."